6th Southeast Asia Capital Confidence Barometer, October 2013

Changing trends

Inside

Continuing positive economic sentiment and strong balance sheets has kept growth as a focus for SEA respondents – and acquisitions are competing with organic growth for capital.

Our respondents continue to maintain an overall positive sentiment about their local markets. Confidence levels in markets such as Philippines, Thailand, Singapore and Vietnam is high while in Indonesia and Malaysia it is moderate.

Across the region, growth is a given with more corporates expecting to see a growth rate for their local economies above 3% over the next 12 months.

76% also say that the regulatory changes in their markets continue to be conducive for growth and business.

91% expect to maintain their current head count levels or grow and create jobs. A wide majority say that credit availability is stable and improving.

With that being the backdrop, SEA corporates are shifting gears from being cautious to being more bold, signaling possibly a change in strategy in the coming months. Growth is firmly the number one priority - a major shift in focus after two years of cautiousness. And the focus is both organic and inorganic growth.

Managing costs, continuing to create efficiencies and staying focused on core products and markets is expected to drive the organic growth strategy. Inorganic growth is encouraging more SEA executives to engage in M&A activities and to do bigger deals.

“With continued inbound interest into many of our markets, acting now to consolidate and compete is a sensible thing to do for those who can afford it.”

While ready access to credit and investing activities dominate the capital agenda SEA corporates are not looking to aggressively gear up. Instead, they want to put their balance sheets to work smarter and maintain low gearing.

These are smart choices. They also signal that many of our corporates will continue to have a lot more head room to grow, invest to expand and weather external storms.

About this survey

The Global Capital Confidence Barometer is a regular barometer of senior executives from large companies around the world, conducted by the Economist Intelligence Unit (EIU). Our panel comprises select EY clients and contacts, and regular EIU contributors.

This Southeast Asia subset of our findings gauges corporate confidence in the economic outlook, and it identifies boardroom trends and practices in the way companies manage their Capital Agenda.

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EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.